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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-KSB [X]
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934For
the fiscal year ended December 31, 2003
 [  ]
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934For
the transition period from

toCommission
file number
 METALINE CONTACT MINES 
  Washington
    
    91-0779945(State or other jurisdiction or incorporation
or organization)
    
    (I.R.S. Employer Identification No.)
 6599 Prichard Creek Road, Murray, Idaho
    
    83874(Address of principal executive offices)
    
    (Zip Code)
 Issuers telephone number 920-987-5317 Securities registered under Section 12(b) of the Exchange Act: Title of each class
    
    Name of each exchange on which registered
 Securities registered under Section 12(g) of the Exchange Act: Capital Common - $0.05 Par Value 
    Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X]  Yes  [  ]  No Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [  ] State issuers revenues for its most recent fiscal year. $15,520.00




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State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days. $398,297 as of March 26, 2004 (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Check whether the issuer has filed all documents and reports to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  [  ]  Yes  [  ]  No. NOT
APPLICABLE (APPLICABLE ONLY TO CORPORATE REGISTRANTS) State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date. 14,531,254 as of March 26,
2003 DOCUMENTS NCORPORATED BY REFERENCE If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 (Securities Act). The
listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for the fiscal year ended December 31, 1990). Transitional Small Business Disclosure Format (check one): Yes [   ] No [X]




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TABLE OF CONTENTS PART IItem 1.
    
    Description of Business
    
    
    4Item 2.
    
    Description of Property
    
    
    7Item 3.
    
    Legal Proceedings
    
    
    8Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    8PART IIItem 5.
    
    Market for Common Equity and Related Stockholder Matters
    
    
    8Item 6.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    8Item 7.
    
    Financial Statements
    
    
    F-1Item 8.
    
    Changes In and Disagreements With Accountants on Accounting
And Financial Disclosure
    
    
    10PART IIIItem 9.
    
    Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
    
    
    10Item 10.
    
    Executive Compensation
    
    
    11Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    13Item 12.
    
    Certain Relationships and Related Transactions
    
    
    14Item 13.
    
    Exhibits and Reports on Form 8-K
    
    
    14Item 14.
    
    Controls and Procedures
    
    
    15EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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PART I 
 Item 1. Description of Business  The Company was incorporated in the State of Washington on November 15,
1928, for the purpose of engaging in the mineral exploration business,
and all business appertaining thereto.Subsequent its incorporation the Company began acquiring unpatented
zinc-lead mining claims and other mineral rights in the Metaline
District, Pend Oreille County, State of Washington.Unpatented mining claims are claims in which an individual,
corporation, or other legal entity, by the act of a valid location under
the mining laws of the United States, has obtained a right to remove and
extract minerals from the land, but where full title of the land has not
been acquired from the U.S. Government. On the other hand, a patented
mining claim refers to a parcel of mineral land the U.S. Government has
conveyed full title thereto.From 1928 until 1946, the Company was inactive, except for maintaining
its mineral holdings, and in 1946, leased its mineral holdings to
Metaline Mining & Leasing Company for a period of 25 years. There is no
affiliation, past or present, between the Company and Metaline Mining &
Leasing Company.In 1959, The Bunker Hill Company (hereinafter Bunker Hill) began
managing the Companys business affairs and minerals holdings. The
Company, however, remained a non-operating corporation until after the
expiration of its lease with Metaline Mining & Leasing Company.On November 7, 1960, the Company entered into a Plan and Agreement of
Reorganization and Re-capitalization (the 1960 Reorganization
Agreement) with the Bunker Hill and Day Mines Inc., who were large
shareholders of the Company at that time, and the owners of other mining
properties in the Metaline District. The parties to the 1960
Reorganization Agreement felt that by consolidating their respective
mining properties under the common ownership of the Company, the combined
mining properties could be more advantageously explored and, if
warranted, developed and mined. In consideration of the additional
mining properties, and the cancellation of certain indebtedness, the
Company issued 1,288,619 shares of its common stock to Bunker Hill, and
728,825 shares of its common stock to Day Mines Inc.On April 14, 1976, the Company entered into an Exploration and Operating
Agreement (the 1976 Agreement) with Bunker Hill whereby Bunker Hill was
granted the exclusive right to conduct exploration and, if warranted,
development and mining operations on the Companys mineral holdings.In 1982, control of the Company was transferred from Bunker Hill to
Bunker Limited Partnership, who subsequently transferred the operating
control of the 1976 Agreement to Pintlar Corp., a subsidiary of Gulf
Resources & Chemical, the parent company of Bunker Hill.In 1990, Pintlar Corp. transferred operating control of the 1976
Agreement to Resource Finance Inc., the U.S. subsidiary of RFC Resource
Finance Corporation, Toronto, Ontario, Canada.In 1996, Cominco American Incorporated acquired operating control of the
1976 Agreement with its acquisition of Resource Finance Inc. -4-




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In October of 1996, then-current management and majority shareholders of
the Company commenced a structured reorganization whereby the Company
organized Metaline Contact Mines LLC, a Delaware Limited Liability
Company (hereinafter MCMLLC), and assigned to MCMLLC all of the surface
rights to the private real property and standing timber thereon
(hereinafter the Assigned Assets) it acquired in the 1960
Reorganization Agreement in exchange for a 99% equity membership interest
in MCMLLC. At that time, management of the Company felt it would be in
the best interests of the shareholders of the Company to transfer the
Assigned Assets to a limited liability company that would be owned by the
shareholders of the Company in proportion to their interests in the
Company. The Company became the Managing Member of MCMLLC. Immediately
after its organization, and prior to being assigned the Assigned Assets,
MCMLLC had no business or assets.As a part of its reorganization, the Company retained ownership of all
sub-surface mineral rights to the Assigned Assets, ownership of its
unpatented mining claims and attached mineral rights, and offered its
shareholders the opportunity to exchange their shares of common stock in
the Company for proportionate non-managing equity membership interests in
MCMLLC. A total of 19 of the Companys 302 shareholders accepted the
exchange offer resulting in MCMLLC owning 11,686,643 shares of common
stock in the Company, or 93.02% of the outstanding shares of the Company
at the time of the reorganization.On September 1, 1997, then-current management of the Company negotiated a
new Mining Lease With Purchase Option with Cominco American Incorporated
(hereinafter the New Cominco Lease) on the Companys mineral rights,
which New Cominco Lease superseded the 1976 Agreement in its entirety.On June 1, 1998, Nor-Pac Limited Company, an Idaho Limited Liability
Company (hereinafter Nor-Pac), acquired a 99.994% non-managing equity
membership interest in MCMLLC from 18 of its non-managing members, and
became the indirect controlling shareholder of the Company through its
majority ownership of MCMLLC. Simultaneous therewith, the Companys
Board of Directors resigned, Nor-Pac filled the vacant Board with its
slate of Directors, and MCMLLC sold the Assigned Assets to an independent
third party.The Company does not own any interest in mineral properties or rights
that are currently in production, nor has it ever derived any revenues
from the sale of zinc or other materials. It has never filed any
bankruptcy, receivership or similar proceedings.Business of CompanyThe Company leases its mineral rights and properties described in Item 2
below to Teck Cominco American Incorporated (hereinafter Teck Cominco)
pursuant to the New Cominco Lease. Teck Cominco is the U.S. subsidiary of
Teck Cominco Ltd., a large international Canadian mining company. Teck
Cominco is exploring for zinc and lead ores on the Companys mineral
rights. In the event that Teck Cominco is successful in discovering a
commercially viable ore body on the Companys mineral holdings, and that
ore body is placed into commercial production, the Company will receive
production royalties from Teck Cominco.The term of the New Cominco Lease is for 20 years, with an option for an
additional 20-year period, and so long thereafter as there is commercial
production from the Companys mineral rights. Under the terms of the
New Cominco Lease, the Company receives an advance royalty of $3,000.00
per quarter for the first 5 years, $4,000.00 per quarter for the next 5
years, and $5,500.00 per quarter thereafter. The New Cominco Lease also
provides a 3% Net Smelter Returns production royalty upon the
commencement of commercial production. During the first 3 years of
production the production royalty is fixed at $150,000.00 per year. -5-




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There are no assurances, however, that Teck Cominco will be successful in
discovering a commercially viable ore body on the Companys mineral
holdings.Under the terms of the New Cominco Lease, the Company is not responsible
for or subject to any existing or probable governmental approvals or
regulations with regard to its mineral rights. In the event, however,
Teck Cominco is successful in placing the Companys mineral rights into
commercial production, federal, state and local governmental permits may
be required in which case obtaining any such permits is the
responsibility of Teck Cominco. Any ores mined from the Companys
mineral rights by Teck Cominco would be by underground mining methods,
and transported underground to Teck Comincos processing facilities that
are situated on Teck Cominco owned properties. Tailings ponds and
associated waste rock storage areas will be on Teck Cominco owned
properties, and, except for surface exploration drilling, and geophysical
and geochemical surveys, there will be no surface disturbances on the
Companys holdings that would be subject to reclamation requirements.
Surface disturbances from surface drilling, and geophysical and
geochemical surveys, would be extremely minor, and in the event Teck
Cominco failed to reclaim such sites, the Company may be required to
reclaim same, in which case the resultant liability to the Company would
not be significant. All permitting, and reclamation requirements and
liabilities with regard to Teck Comincos processing facilities are for
the sole account and responsibility of Teck Cominco. Failure by Teck
Cominco to obtain any necessary permits for its processing facilities
could result in Teck Cominco ceasing its exploration activities on the
Companys mineral holdings, and subject the New Cominco Lease to
termination by Teck Cominco on its terms.In 1995, McCulley Frick & Gilman Inc. (MF&G), an environmental
consulting and engineering services firm with offices in Wallace, Idaho,
conducted a Phase I Environmental Site Assessment (the ESA) of the
Companys private landholdings. In December of 1997, the Company
obtained an update to the ESA also authored by MF&G. Both assessments
affirmed that previous mining exploration activities conducted on the
properties left no hazardous substances or facilities, as defined in
the Comprehensive Environmental, Response, Compensation, and Liability
Act (CERCLA), and pose no threat to human health, natural resources, or
the environment from the standpoint of releases of any potentially
hazardous substances to soil, groundwater, surface water or air. It is
therefore managements opinion that the Company would have minimal
liability if named as a Potentially Responsible Party (PRP) under
CERCLA from any past mining-oriented activities. Further, as stated in
the above paragraph, any future mining operations that may be conducted
on the Companys mineral rights by Teck Cominco under the New Cominco
Lease would be by underground mining methods and the ores extracted would
be transported underground in raw form directly to Teck Comincos
processing facilities located on Teck Cominco owned property. No
hazardous substances or facilities will be used or constructed on the
Companys mineral holdings. Nevertheless, the Company is listed in the
chain-of-title of the properties and could be named as a PRP in the
future. However, it is managements opinion that any such liability from
being named a PRP would be minimal, and defendable under 42 U.S.C. §
9607(b)(3).Additionally, under the New Cominco Lease, Teck Cominco is responsible
for maintaining the Companys unpatented mining claims. To maintain an
unpatented mining claim, the claimant must pay a $100 maintenance fee and
incur $100 in assessment expenditures annually per claim. In the event
Teck Cominco failed to maintain the Companys unpatented mining claims,
the Company would be required to pay the annual maintenance fee and incur
assessment expenditures in order to maintain the claims in good standing.
Any such failure by Teck Cominco could a significant financial
obligation of the Company.The Company has no employees, has not announced any new products or
services, does not require sources and raw materials, and has spent no
funds on research the last two fiscal years. -6-




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Subsequent Event  Business of CompanyOn January 10, 2004, the Company entered into an Agreement with Paymaster
Resources Incorporated (hereinafter Paymaster) to acquire Paymasters
mineral lease on the Golden Chest Mine, near Murray, Idaho (the Golden
Chest Lease), and Paymasters exploration agreement with New Jersey
Mining Company (the New Jersey Exploration Agreement). The Paymaster
shareholders approved the Agreement at a special meeting on February 23,
2004. The Company has issued Paymaster 466,954 shares of its authorized,
but unissued common stock. Paymaster is considered a related party due
to common directors.Reports to securities holdersOn September 14, 2000, the Company became a reporting company with the
Securities and Exchange Commission, and will file all required reports.
The Company will provide its shareholders with copies of its annual
reports upon request.Additionally, the public may read and copy all materials the Company
files with the U.S. Securities and Exchange Commission (the SEC) at the
SECs Public Reference Room at 450 Fifth Street N.W., Washington, D.C.
20549. The public may also obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site (http://www.sec.gov) that will contain
reports, proxy and information statements and other information regarding
the Company that is filed electronically with the SEC. 
 Item 2. Description of Property  The Company owns mineral rights and properties in the Metaline District,
Pend Oreille County, State of Washington, as follows: the mineral rights
attached to 5,798 acres of fee simple property; the mineral rights
attached to 487 acres of patented mining claims, and 1,925 acres of
unpatented mining claims. The Company does not own the surface rights to
any of the fee simple property or patented mining claims. It does,
however, have the right to use of the surface of the fee simple property
and patented mining claims for exploration purposes, and the surface of
the unpatented mining claims for exploration and, if warranted,
development and mining purposes.The Company has been renting office facilities at 6599 Prichard Creek
Road, Murray, Idaho 83874, pursuant to an Office Service Agreement, dated
June 1, 1998, as amended on July 1, 1999 and September 1, 2000, with
Murrayville Land Company LLC (hereinafter Murrayville). The term of
the agreement was month-to-month, for $225.00 per month, plus its share
of the operating costs of the facility.Subsequent Event - Office Services AgreementEffective January 1, 2004, Murrayville terminated the Office Services
Agreement due to its desire to sell the facility.The Company does not invest in real estate or interests in real estate,
does not invest in real estate mortgages or the types of properties
subject to mortgages, does not invest in the securities of or interests
of persons primarily engaged in real estate, does not own any improved
properties, and has no plans for the renovation, improvement or
development of any of its properties. In the opinion of management, the
Companys properties are adequately covered by insurance. -7-




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Item 3. Legal Proceedings  There are no pending legal proceedings to which the Company, its
directors, officers or affiliates, or owners of record or beneficially of
more than 5% of any class of voting securities are a party, or of which
its mineral rights or properties are subject. 
 Item 4. Submission of Matters to a Vote of Security Holders  No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, for the year ending December 31,
2003. 
 PART II 
 Item 5. Market for Common Equity and Related Stockholder Matters  The common stock of the Company is traded in the over-the-counter market
on the NASD Bulletin Board under the symbol MTLI. The shares were
listed for trading during the third quarter of 2000. The range of high
and low bid-ask information for the last eight quarters is as follows: High
    
    Low1st Quarter, 2002
    
    $
    0.45
    
    
    $
    0.152nd Quarter, 2002
    
    $
    0.45
    
    
    $
    0.153rd Quarter, 2002
    
    $
    0.45
    
    
    $
    0.154th Quarter, 2002
    
    $
    0.45
    
    
    $
    0.151st Quarter, 2003
    
    $
    0.45
    
    
    $
    0.152nd Quarter, 2003
    
    $
    0.45
    
    
    $
    0.153rd Quarter, 2003
    
    $
    0.45
    
    
    $
    0.154th Quarter, 2003
    
    $
    0.45
    
    
    $
    0.15
  The quotations above were provided by Pennaluna & Company, a licensed
securities brokerage firm registered with the National Association of
Securities Dealers, located in Coeur dAlene, Idaho. There is no
affiliation between the Company and this firm. The quotations reflect
inter-dealer prices, without retail mark-up, markdown or commissions, and
may not represent actual transactions.Management approved the reservation of 2,000,000 shares of the Companys
common stock for options pursuant to the 1999 Stock Option Plan (the
Stock Option Plan). The Stock Option Plan was approved at a Special
Meeting of Shareholders on November 15, 1999. Immediately thereafter,
the Company issued options to its three (3) directors and two (2)
independent consultants, totaling One Million (1,250,000) shares. The
independent consultants are Gene George of Spokane, Washington, and
Nelson Robert Howard of Lewiston, Idaho.There are approximately 293 shareholders of the Companys common stock at
the date hereof.To the managements knowledge, the Company has never paid a dividend, and
there are no plans to pay dividends in the foreseeable future. 
 Item 6. Managements Discussion and Analysis of Financial Condition and Results of Operations  Results of Operations -8-




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The Company had revenues from operations of $15,520 in 2003, versus
$12,790 in 2002. The increase of $2,730 was due to the increase of
advanced royalties paid to the Company under the New Cominco Lease. The
Company also experienced a significant decrease in its operating loss to
$23,810 in 2003 from $56,631 in 2002. The decrease of $32,821 was
predominately attributable to decreased management and consulting fees,
as well as a decrease in professional fees.Management and consulting fees decreased by $34,114 in 2003 to $5,500
from $39,614 in 2002, due to the decrease in management fees paid to
Nor-Pac. Professional fees, consisting of legal and accounting,
decreased $1,975 to $15,719 in 2003 from $17,694 in 2002, due to a
decrease in accounting expenses. Transfer agent fees increased $217 to
$1,370 in 2003 versus $1,153 in 2002 due to an increase in monthly fees
charged by the Companys transfer agent. Office supplies and expenses
increased by $5,781 to $16,741 in 2003 from $10,960 in 2002, due to
increased costs associated with SEC reporting requirements via EDGAR, and
past due directors fees.The Companys other income decreased by $1,245 in 2003 to $6,857 from
$8,102 in 2002. The decrease was predominantly caused by the decrease in
dividend income earned on the Companys money market account due to lower
interest rates.Financial ConditionThe Company believes it can satisfy its cash requirements for the next
two (2) years. Current level of operations includes maintaining
compliance with the New Cominco Lease, and the reporting requirements of
the SEC. Thereafter, the Company may require additional capital for
future operating costs and working capital. Such additional capital could
be obtained from either increased revenues from operations (in the event
the Companys mineral holdings or properties were placed into commercial
production), or from the sale of shares of the Companys authorized, but
unissued, common stock.However, any production decision on the Companys mineral rights and
properties is under the sole discretion and control of third parties.
Further, there are no assurances that the Company would be able to sell shares of its authorized, but unissued, common stock on terms acceptable
to the Company. And, any such sales of shares could be dilutive to the
Companys then-existing shareholders. Any debt financings could involve
restrictive covenants with respect to future capital raising activities,
and other financial and operational matters.At present, there are no trends, events or uncertainties that have, or
are reasonably likely to have, a material impact on the Companys
short-term or long-term liquidity. There are no material commitments for
capital expenditures, except for managing of its own business affairs,
and there are no known trends, events or uncertainties that have, or that
are reasonably expected to have, a material impact on the revenues from
operations.Liquidity and Capital ResourcesTo date, the Company has funded its capital requirements from revenues
from operations, and dividends and interest earned on its cash accounts.
As of December 31, 2003, the Companys cash position was $105,687 as
compared to $129,124 on December 31, 2002. The Company has no debt, and
does not expect to incur any debt in the immediate future. The Companys
most significant cash requirements have been its management fees, and
office services and accounting expenses. The Company has eliminated a
major portion of these expenses with the termination of the Management
Agreement and Office Services Agreement, effective January 1, 2004.The Company should not experience any significant increase in capital
requirements as a result of its agreement with Paymaster Resources
Incorporated. (See Subsequent Event - Business of Company on page 7
above) -9-




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Item 7. Financial Statements  Financial Statements for the Company for the fiscal years ended December
31, 2003 and December 31, 2002 audited by Williams & Webster, P.S., are
included herein. METALINE CONTACT MINES FINANCIAL STATEMENTS
December 31, 2003 Williams & Webster, P.S.Certified Public AccountantsBank of America Financial Center
601 W. Riverside, Suite 1940
Spokane, WA 99201 F - 1




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METALINE CONTACT MINES TABLE OF CONTENTS INDEPENDENT AUDITORS REPORT
    
    
    F-3FINANCIAL STATEMENTSBalance Sheets
    
    
    F-4Statements of Operations
    
    
    F-5Statement of Stockholders Equity
    
    
    F-6Statements of Cash Flows
    
    
    F-7NOTES TO FINANCIAL STATEMENTS
    
    
    F-8
 F-2




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The Board of Directors
Metaline Contact Mines
Murray, Idaho 
 INDEPENDENT AUDITORS REPORT We have audited the accompanying balance sheets of Metaline Contact Mines as of
December 31, 2003 and 2002, and the related statements of operations,
stockholders equity and cash flows for the years then ended. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Metaline Contact Mines as of
December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America. Williams & Webster, P.S.
Spokane, WashingtonCertified Public Accountants
March 5, 2004 F-3




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METALINE CONTACT MINES
BALANCE SHEETS December 31,
    
    December 31,2003
    
    2002ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    105,687
    
    
    $
    111,124Receivable from related party
    
    
    
    
    
    
    18,000Total Current Assets
    
    
    105,687
    
    
    
    129,124OTHER ASSETSReceivables from related parties
    
    
    109,413
    
    
    
    109,413Accrued interest receivable
    
    
    22,978
    
    
    
    15,320Investment in LLC
    
    
    33,935
    
    
    
    35,109Total Other Assets
    
    
    166,326
    
    
    
    159,842TOTAL ASSETS
    
    $
    272,013
    
    
    $
    288,966LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESDeferred royalty income
    
    $
    3,880
    
    
    $
    3,880Total Current Liabilities
    
    
    3,880
    
    
    
    3,880COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, $0.05 par value;
20,000,000 shares authorized,
14,064,300 shares issued and outstanding
    
    
    703,222
    
    
    
    703,222Additional paid-in capital
    
    
    302,165
    
    
    
    302,165Stock options
    
    
    17,907
    
    
    
    17,907Accumulated deficit
    
    
    (755,161
    )
    
    
    (738,208
    )Total Stockholders Equity
    
    
    268,133
    
    
    
    285,086TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    272,013
    
    
    $
    288,966
 The accompanying notes are an integral part of these financial statements. F-4




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METALINE CONTACT MINESSTATEMENT OF OPERATIONS Year EndedDecember 31,
    
    December 31,2003
    
    2002REVENUESRoyalty income
    
    $
    15,520
    
    
    $
    12,790GENERAL AND ADMINISTRATIVE EXPENSESConsulting and management fees
    
    
    5,500
    
    
    
    39,614Professional fees
    
    
    15,719
    
    
    
    17,694Transfer agent fees
    
    
    1,370
    
    
    
    1,153Office supplies and expenses
    
    
    16,741
    
    
    
    10,960TOTAL EXPENSES
    
    
    39,330
    
    
    
    69,421OPERATING LOSS
    
    
    (23,810
    )
    
    
    (56,631
    )OTHER INCOMEDividend income
    
    
    372
    
    
    
    1,522Interest income
    
    
    7,659
    
    
    
    7,659Loss from investment in LLC
    
    
    (1,174
    )
    
    
    (1,079
    )TOTAL OTHER INCOME
    
    
    6,857
    
    
    
    8,102LOSS BEFORE TAXES
    
    
    (16,953
    )
    
    
    (48,529
    )INCOME TAX EXPENSE
    
    
    
    
    
    
    NET LOSS
    
    $
    (16,953
    )
    
    $
    (48,529
    )NET LOSS PER COMMON SHARE,
BASIC AND DILUTED
    
    $
    nil
    
    
    $
    nilWEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,
BASIC AND DILUTED
    
    
    14,064,300
    
    
    
    14,064,300
 The accompanying notes are an integral part of these financial statements. F-5




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##### Table of Contents



METALINE CONTACT MINESSTATEMENT OF STOCKHOLDERS EQUITY Common Stock
    
    AdditionalPaid-in
    
    Stock
    
    Accumulated
    

TotalStockholdersShares
    
    Amount
    
    Capital
    
    Options
    
    Deficit
    
    EquityBalance, December 31, 2001
    
    
    14,064,300
    
    
    $
    703,222
    
    
    $
    302,165
    
    
    $
    17,907
    
    
    $
    (689,679
    )
    
    $
    333,615Net loss for the year ended, December 31, 2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,529
    )
    
    
    (48,529
    )Balance, December 31, 2002
    
    
    14,064,300
    
    
    
    703,222
    
    
    
    302,165
    
    
    
    17,907
    
    
    
    (738,208
    )
    
    
    285,086Net loss for the year ended, December 31, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,953
    )
    
    
    (16,953
    )Balance, December 31, 2003
    
    
    14,064,300
    
    
    $
    703,222
    
    
    $
    302,165
    
    
    $
    17,907
    
    
    $
    (755,161
    )
    
    $
    268,133
 The accompanying notes are an integral part of these financial statements. F-6




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##### Table of Contents



METALINE CONTACT MINES
STATEMENT OF CASH FLOWS For the Year EndedDecember 31,
    
    December 31,2003
    
    2002CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (16,953
    )
    
    $
    (48,529
    )Adjustments to reconcile net loss to net cash
provided (used) by operating activities:Net loss in investment in LLC
    
    
    1,174
    
    
    
    1,079Changes in assets and liabilities:Increase in interest receivable
    
    
    (7,658
    )
    
    
    (7,660
    )Increase (decrease) in deferred royalty income
    
    
    
    
    
    
    880Net cash provided (used) by operating activities
    
    
    (23,437
    )
    
    
    (54,230
    )CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:Cash advance to related party
    
    
    18,000
    
    
    
    (18,000
    )Net cash provided (used) by financing activities
    
    
    18,000
    
    
    
    (18,000
    )CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
    
    
    
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    (5,437
    )
    
    
    (72,230
    )Cash at beginning of period
    
    
    111,124
    
    
    
    183,354Cash at end of period
    
    $
    105,687
    
    
    $
    111,124SUPPLEMENTAL CASH FLOW DISCLOSURES:Income taxes paid
    
    $
    
    
    
    $
    Interest paid
    
    $
    
    
    
    $
    
 The accompanying notes are
an integral part of these financial statements. F-7




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 1  ORGANIZATION AND DESCRIPTION OF BUSINESS Metaline Contact Mines (hereinafter Metaline or the Company) was
incorporated in November of 1928 under the laws of the State of Washington for
the purpose of engaging in mining and the buying and selling of ores, metals,
and minerals. The Company was reorganized and recapitalized in 1960 and its articles of
incorporation were amended to expand its business purposes to include various
additional business activities. Metaline has continued its operations since its
formation and has historically acquired land, mineral rights, patented lode
mining claims, and timber in the Pacific Northwest. In the last quarter of 1996, Metaline transferred substantially all of its
assets to a limited liability company. See Note 4. The Companys year end is December 31. NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and notes are
representations of the Companys management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America and have been
consistently applied in the preparation of the financial statements. Accounting Method The Companys financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America. Recent Accounting Pronouncements In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity (hereinafter
SFAS No. 150). SFAS No. 150 establishes standards for classifying and
measuring certain financial instruments with characteristics of both
liabilities and equity and requires that those instruments be classified as
liabilities in statements of financial position. Previously, many of those
instruments were classified as equity. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. The Company has determined that there was no impact to its financial
statements from the adoption of this statement. In April 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities (hereinafter SFAS No. 149).
SFAS No. 149 amends and clarifies the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under SFAS No. 133, Accounting for Derivative F-8




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recent Accounting Pronouncements (Continued) Instruments and Hedging Activities. This statement is effective for contracts
entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. The adoption of SFAS No. 149 is not expected to
have a material impact on the financial position or results of operations of
the Company. In December 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure (hereinafter SFAS No. 148). SFAS
No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, the statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosure in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The provisions of the statement
are effective for financial statements for fiscal years ending after December
15, 2002. As the Company accounts for stock-based compensation using SFAS No.
123, the adoption of SFAS No. 148 has no material impact on the Companys
financial condition or results of operations. Use of Estimates The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts. Cash and Cash Equivalents For purposes of the statements of cash flows, the Company considers all
short-term debt with original maturities of three months or less to be cash
equivalents. Fair Value of Financial Instruments The carrying amounts for cash, receivables, investments, accounts payable and
accrued liabilities approximate their fair value. All instruments are accounted
for on an historical cost basis, which, due to the short maturity of these
financial instruments, approximates fair value at December 31, 2003. Concentration of Risk The Company maintains its cash in primarily one money market account, the funds
of which are not insured by the Federal Deposit Insurance Corporation. The
balance in that account was $105,216 and $110,353 at December 31, 2003 and
2002, respectively. Further, the Companys sole source of revenues currently
is royalty income received under a mineral property lease with Teck Cominco
American, Inc. See Note 6. F-9




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Derivative Instruments The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 (hereinafter SFAS No. 133), Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB No. 133, and SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, and SFAS No. 149,
Amendment of Statement 133 on Derivative Instruments and Hedging Activities,
the last of which is effective June 30, 2003. These statements establish and
clarify accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. They require that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. If certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss
recognition on the hedging derivative with the recognition of (i) the changes
in the fair value of the hedged asset or liability that are attributable to the
hedged risk or (ii) the earnings effect of the hedged forecasted transaction.
For a derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change. Historically, the Company has not entered into derivatives contracts to hedge
existing risks or for speculative purposes. At December 31, 2003, the Company had not engaged in any transactions that
would be considered derivative instruments or hedging activities. Investments The Company accounts for its investment in Metaline Contact Mines, LLC using
the equity method. See Note 3. Compensated Absences Currently, the Company has no employees; therefore, no liability has been
recorded in the accompanying financial statements. The Companys policy will be
to recognize the costs of compensated absences when there are employees who
earn such benefits. Basic and Diluted Loss Per Share Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Outstanding options have
been excluded from the calculation of diluted loss per share as they would be
antidilutive; accordingly, basic and diluted loss per share are the same. Revenue Recognition The Company recognizes royalty revenue as earned according to contract terms. F-10




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 3  INVESTMENT IN LLC On October 30, 1996, the Company organized a Delaware limited liability
company, Metaline Contact Mines, LLC (hereinafter The LLC). Upon organization
of The LLC, the Company transferred substantially all of its assets (primarily
real property surface rights and timber) to The LLC. At the time of The LLCs
formation, the Company was the sole managing member in The LLC, representing
100% ownership. In 1998, the majority of the Companys interest in The LLC was
expensed in connection with the sale of the majority of The LLCs assets. At the beginning of 1998, the Companys former shareholders acquired 93% of The
LLC by transferring their stock in the Company to The LLC in exchange for
non-managing membership interests. See Note 7. At the conclusion of this
share exchange, the Companys percentage of ownership in The LLC was reduced to
seven percent (7%). The Company wrote down its initial investment by 93% to
reflect its diluted investment in The LLC. After the write down of its
investment and net change in member capital during the year 1998, the value of
the Companys investment in The LLC was $45,440 at December 31, 1998. After the dilution of its investment in The LLC, the Company continued as the
managing member of The LLC. See Note 5. At December 31, 2003, the Company recorded a yearly loss on its investment in
The LLC of $1,174 thereby reducing the Companys recorded interest in The LLC
to $33,935. NOTE 4  MINERAL PROPERTIES In 1996, Metaline transferred timber and real property surface rights to The
LLC (see Note 3) but retained underground mineral rights to the transferred
real property and its mining claims, located in Pend Oreille County in
Washington State. The timber and real property surface rights were deemed by
management to have a value equal to their recorded cost and this cost was
transferred to The LLC. The related mineral rights are carried at no cost on
Metalines books. In 1997, Metaline and The LLC jointly leased certain Pend Oreille County real
estate and all related mineral rights to a major mining company. See Note 6. NOTE 5  RELATED PARTY TRANSACTIONS In March 2002, the Company advanced $18,000 on a short-term, non-interest
bearing, unsecured basis to Murrayville Land Company, LLC, an affiliated
company, to facilitate a real estate purchase. This receivable was repaid in
May 2003. F-11




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 5  RELATED PARTY TRANSACTIONS (continued) During 1998, The LLC sold property for a net gain of $5,958,762. Metalines
share of this gain, before adjustments of the Companys investment from The
LLCs operating results and write down from its substantial decrease in
ownership of The LLC, was $507,858. See Note 3. The Company recorded a
non-current, related party receivable of $109,413 for the balance of the
distribution. Due to uncertainty as to the date this receivable will be
collected, this asset together with accrued interest at the rate of 7 percent
per annum is recorded as a non-current asset at December 31, 2003 and December
31, 2002. In June 1998, Metaline executed an agreement with Nor-Pac Limited Company
(hereinafter Nor-Pac), an affiliated company, wherein, for providing
management and consulting services to Metaline, Nor-Pac was entitled to receive
500,000 shares of Metaline common stock in the second half of 1998, 250,000
shares of Metaline common stock quarterly in 1999 and $10,000 per month
thereafter commencing on January 1, 2000. This agreement was modified with an
effective date of January 1, 2002, reducing the fee to $3,000 per month. A
further modification was made effective January 1, 2003, reducing the
management fee to $500 per month. For additional information on related parties, see Notes 3, 6, 7 and 10. NOTE 6  MINING LEASE WITH PURCHASE OPTION On September 1, 1997, Metaline and The LLC acting jointly as lessors executed
an agreement with Cominco American Incorporated (hereinafter Cominco) wherein
Cominco received the right to explore, develop, and mine Metalines underground
mineral rights in Pend Oreille County, Washington for a period of twenty years
with an option renewal period of the same length. Under this lease agreement,
Cominco obligated itself to pay the lessors $3,000 per quarter for the first
five years of the lease with ascending quarterly increments at each successive
five year interval. The lease characterizes the aforementioned quarterly
disbursements as advance royalty payments which may be fully offset against a
three-percent production royalty retained by the lessors. The lease agreement
gives Cominco the option to purchase 200 surface acres of the leased property
for fair market value during the lease term. During
2001, Teck Cominco Limited was formed, following the Acquisition of
Cominco Limited by another mining company, Teck Corporation. The former
subsidiary of Cominco Limited, Cominco American Incorporated, was renamed Teck
Cominco American, Inc., and continues as lessee under the original Cominco
lease agreement. Effective March 15, 2002, the aforementioned lease agreement was amended,
thereby reducing the amount of acreage leased from the Company, and providing
for an approximately three percent (3%) decrease in royalty payments. From the inception of the lease through December 31, 2003, Metaline has
received $90,966 in payments from Cominco and Teck. F-12




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 7  CHANGE IN LLC OWNERSHIP On June 1, 1998, Nor-Pac Limited Company (Nor-Pac) purchased control of The
LLC from its three principal owners at the time (Bunker Limited Partnership,
Hecla Mining Company, and Metaline Mining & Leasing Company) by acquiring these
entities non-managing membership interests in Metaline Contact Mines LLC. See
Notes 1 and 5. NOTE 8  INCOME TAXES Income taxes are provided based upon the liability method of accounting
pursuant to Statement of Financial Accounting Standards No. 109 Accounting for
Income Taxes (hereinafter SFAS No. 109). Under this approach, deferred
income taxes are recorded to reflect the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end. A valuation allowance is recorded against
the deferred tax asset if management does not believe the Company has met the
more likely than not standard imposed by SFAS No. 109 to allow recognition of
such an asset. At December 31, 2003 and 2002, the Company had a net deferred tax asset of
approximately $212,000 and $160,000, respectively, principally arising from net
operating loss carryforwards for income tax purposes, which were calculated
using a 34% tax rate. This resulted in a change to the net deferred tax asset
of approximately $52,000. As management of the Company cannot determine that it
is more likely than not that the Company will realize the benefit of the net
deferred tax asset, a valuation allowance equal to the net deferred tax asset
has been established. At December 31, 2003, the Company has a net operating loss carryforward of
approximately $625,000, which will fully expire in the year 2023. NOTE 9  STOCK OPTIONS The Company has adopted Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (hereinafter SFAS No. 123), which
defines a fair value-based method of accounting for stock options and other
equity instruments. This method measures compensation costs based on the
estimated fair value of the award and recognizes that cost over the service
period. On November 16, 1999, the Companys board of directors approved the Metaline
Contact Mines 1999 Stock Option Plan. This plan allows the Company to
distribute up to 2,000,000 shares of common stock shares to officers,
directors, employees and consultants through the authorization of the Companys
board of directors at an initial exercise price of $0.125, or $0.15, depending
on the terms of the option certificate. The options may be exercised until
November 16, 2009, at which time they expire. F-13




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 9  STOCK OPTIONS (Continued) The fair value of the options granted on November 12, 2001 was estimated using
the Black-Scholes Option Price Calculation. The following assumptions were made
to estimate fair value: the risk-free interest rate is 6.0%, volatility is 24%,
and the expected life of the options is eight years. Accordingly, $4,275 of
option expense was recorded in the Companys financial statements as consulting
and management fees. In accordance with Financial Accounting Standard No. 123
paragraph 115, this expense was deemed to be an estimate, subject to adjustment
by decreasing the expense in the period of forfeiture. Following is a summary of the status of fixed options outstanding at December
31, 2002 and December 31, 2003: WeightedAverageNumber of
    
    ExerciseShares
    
    PriceOutstanding January 1, 2002
    
    
    1,250,000
    
    
    $
    0.13Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding, December 31, 2002
    
    
    1,250,000
    
    
    $
    0.13Exercisable, December 31, 2002
    
    
    1,250,000
    
    
    $
    0.13Outstanding January 1, 2003
    
    
    1,250,000
    
    
    $
    0.13Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding, December 31, 2003
    
    
    1,250,000
    
    
    $
    0.13Exercisable, December 31, 2003
    
    
    1,250,000
    
    
    $
    0.13
 NOTE 10  COMMITMENTS AND CONTINGENCIES All earnings from The LLC in 1997 and 1996 were attributed by The LLCs
principal owners to Metaline. Accordingly, Metaline reported these earnings as
its own taxable income (on both Metalines and The LLCs federal income tax
returns) with Metaline retaining only a 6.9861% interest in The LLC. For
calendar years 1998 through 2003, Metaline reported only its pro rata share
(6.9861%) of taxable income from The LLC, with other LLC members reporting
their respective share of LLC taxable income. F-14




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##### Table of Contents



METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 NOTE 10  COMMITMENTS AND CONTINGENCIES (continued) The LLC has agreed, in writing, to indemnify Metaline for any prior year income
distributions requested by other LLC members. As of December 31, 2003, no cash
or property distributions were made by the LLC to its members for
indemnification purposes. In view of the ownership changes in The LLC, future
distributions are expected to be made by The LLC to its members as determined
from time to time by Metaline, its managing member. See Note 7 regarding a
change in LLC ownership and see Note 5 regarding related party commitment. NOTE 11  SUBSEQUENT EVENTS In January 2004, the Company agreed to issue 466,954 shares of its common stock
to Paymaster Resources Incorporated (hereinafter Paymaster), a related party
(due to common officers and directors), in order to acquire Paymasters
interest in a minerals lease to patented mining claims in Shoshone County,
Idaho. In this transaction, the Company also acquired Paymasters interest in
an exploration agreement with New Jersey Mining Company which relates to the
aforementioned mining claims. F-15




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##### Table of Contents



Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure  There have been no changes in or disagreements with accountants on
accounting and financial disclosure during the Companys two most recent fiscal
years. 
 PART III 
 Item 9. Directors, Executive Officers, and Promoters and Control Persons  The officers and directors of the Company are as follows:Richard L. Howell. Age 69. Mr. Howell has been the President and a
director of the Company since 1998. From 1978 to 1995, Mr. Howell was
the Personal Representative of the Estate of Nelson R. Howard and Trustee
of the Testamentary Trust created under the Will of Nelson R. Howard.
From 1995 to June 1, 2000, Mr. Howell was the Manager of Golconda Limited
Company, the successor to the Nelson Howard Trust. From 1994 to present
Mr. Howell has been the President and a Governor of Mission Mountain
Interests Ltd. Co.; from 1997 to present the President and a Governor of
Nor-Pac Limited Company; from 1998 to present, the President and a
Governor of Murrayville Land Company LLC, and from 1998 to present, a
Director of Paymaster Resources Incorporated.John W. Beasley. Age 58. Mr. Beasley has been the Secretary and a
director of the Company since 1998. He holds a Bachelor of Science
degree in Agricultural Economics from the University of California at
Berkeley. From 1967 to 1975, Mr. Beasley played professional football
for the Minnesota Vikings (including Super Bowl IV) and New Orleans
Saints. From 1976 to 1982, he held numerous management positions with
the Gulf Consolidated Services organization, including Vice President -
Eastern Hemisphere in London, England. From 1992 to present, Mr. Beasley
has been President and Manager of J.W. Beasley Interests LLC; from 1994
to present, the Secretary and a Governor of Mission Mountain Interests
Ltd. Co.; from 1997 to present, the Secretary and a Governor of Nor-Pac
Limited Company; from 1998 to present, the Secretary and a Governor of
Murrayville Land Company LLC, and the President and a Director of
Paymaster Resources Incorporated; from 1999 to present, the Secretary and
a Governor of Prichard Creek Resource Partners LLC.Ed Pommerening. Age 56. Mr. Pommerening has been a director of the
Company since 1998. He holds a Bachelor of Science degree in Forestry
from the University of Idaho. From 1974 to 1982, Mr. Pommerening was the
Forester for The Bunker Hill Company, and from 1982 to 1991 for the
Bunker Limited Partnership. From 1991 through 1993, Mr. Pommerening was
the Forester for Pintlar Corp. From 1993 to the present, Mr. Pommerening
has been the President and Manager of Riverview Timber Services LLC; from
1997 to present, a Governor of Nor-Pac Limited Company, and from 1998 to
present, the Secretary and a Director of Paymaster Resources
Incorporated.The Directors of the Company are not directors of any other reporting
companies. There are no family relationships among the officers and
directors of the Company. None of them have been subject to a bankruptcy
petition filed by or against any business of which they were officers,
directors or partners; been convicted in a criminal proceeding, or
subject to a pending criminal proceeding; been, or is subject to any
order, judgment, or decree of any court of competent jurisdiction
permanently or temporarily enjoining, barring, suspending or limiting
their involvement in any type of business, securities or banking
activities. None of the officers and directors of the Company have
violated any federal or state securities laws, or found by any court or
the Securities and Exchange Commission to have violated any such laws. -10-




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##### Table of Contents



Item 10. Executive Compensation  On June 1, 1998, the Company entered into the Management Agreement
described below with Nor-Pac Limited Company (hereinafter Nor-Pac). To
date, the Company has paid Nor-Pac management fees of 1,500,000 shares of
its authorized, but unissued, common stock, with an aggregate value of
$75,000, and $281,500 in cash. Nor-Pac is owned, as to 75%, by entities
that are owned by the Companys directors as disclosed below.Summary Compensation Table SUMMARY COMPENSATION TABLE Long Term CompensationAnnual Compensation
    
    Awards
    
    Payouts(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)
    
    (g)
    
    (h)
    
    (i)Name
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted
    
    Securitiesand
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Annual
    
    Stock
    
    Underlying
    
    LTIP
    
    All OtherPrincipal
    
    
    
    
    
    Salary
    
    Bonus
    
    Compensation
    
    Awards
    
    Option/SAR
    
    Payouts
    
    CompensationPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    ($)
    
    ($)Richard
    
    
    2001
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Howell,
    
    
    2002
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0President and Director
    
    
    2003
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,400John
    
    
    2001
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Beasley,
    
    
    2002
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Secretary and Director
    
    
    2003
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,400Ed
    
    
    2001
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Pommerening Director
    
    
    2002
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    02003
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    1,400
  Option/SAR Grants Table Option/SAR Grants in Last Fiscal Year Individual Grants(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)Number of Securities
    
    % of Total Options/SARs
    
    Exercise orUnderlying Options/SARs
    
    Granted to Employees in Fiscal
    
    Base Price
    
    ExpirationName
    
    Granted
    
    Year
    
    ($/S)
    
    Date0
    
    
    
    0
    
    
    
    N/A
    
    
    
    N/A
 -11-




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Note:
    
    The Exercise Price, as specified in column d
above is subject to adjustment. In the event the Company
issues or sells any common stock for a per share
consideration of less than the Exercise Price stated in
column d above, the Exercise Price shall be reduced to the
price (calculated to the nearest cent) determined by
multiplying the Exercise Price in effect immediately prior to
the time of such issue or sale by a fraction (i) the
numerator of which shall be the sum of (x) the aggregate
number of common shares outstanding immediately prior to such
issue or sale plus (y) the consideration received by the
Company upon such issue or sale, and (ii) the denominator of
which shall be the product of (x) the aggregate number of
common shares outstanding immediately after the issue or
sale, multiplied by (y) the market price of the common shares
immediately prior to such issue or sale.No adjustment of the Exercise Price shall be made by reason
of (i) the issue, sale, or grant under any stock option plan
or stock purchase plan of the Company or under any
individual arrangement or otherwise, to any employee or
director of the Company or any independent contractor, in
consideration of the rendering of services to the Company by
such employee, director, or independent contractor, of any
common shares or rights to subscribe for or to purchase, or
options for the purchase of, common shares or convertible
securities or (ii) a change in the purchase price provided
for in any such right or option, in the additional
consideration, if any, payable upon the conversion or
exchange of any such convertible securities, or in the rate
at which any such convertible securities are convertible or
exchangeable.
 Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values (a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)Number of Securities Underlying
    
    Value of Unexercised In-theShares
    
    Value
    
    Unexercised Options/SARs at FY-
    
    Money Options/SARs at FY-Acquired on
    
    Realized
    
    End (#)
    
    End ($)Name
    
    Exercise (#)
    
    ($)
    
    Exercisable/Unexecisable
    
    Exercisable/UnexecisableRichard
    
    
    0
    
    
    
    0
    
    
    
    0 / 0
    
    
    $
    0 / $0HowellJohn
    
    
    0
    
    
    
    0
    
    
    
    0 / 0
    
    
    $
    0 /$0BeasleyEd
    
    
    0
    
    
    
    0
    
    
    
    0 / 0
    
    
    $
    0 / $0PommereningGene
    
    
    0
    
    
    
    0
    
    
    
    0 / 0
    
    
    $
    0 / $0GeorgeNelson
    
    
    0
    
    
    
    0
    
    
    
    0 / 0
    
    
    $
    0 / $0Robert
Howard
 -12-




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##### Table of Contents



The Company has no Long Term Incentive Plans. Directors of the Company
receive $175.00 for each regularly scheduled meeting of directors, and
$350.00 for each specially scheduled meeting, plus normal out-of-pocket
expenses incurred to attend said meetings. Except for the options
granted to the Directors previously described, there are no other
arrangements to compensate directors. The Company has no employment
contracts with its executive officers, and no compensatory plan or
arrangements with its executive officers in the event of the resignation,
retirement or any other termination of such executive officers, nor does
the Company have any arrangements with its executive officers in the
event of a charge in control of the Company. 
 Item 11. Security Ownership of Certain Beneficial Owners and Management  The following table sets out the names and shareholdings of beneficial
owners known to the Company to own more than five percent (5%) of the
common stock of the Company, each director and officer of the Company,
and the shareholdings of all directors and officers as a group. (2)
    
    (3)Name and
    
    Amount and
    
    
    
    
    
    (5)Address of
    
    Nature of
    
    
    
    
    
    Amount and (Percent)(1)
    
    Beneficial
    
    Beneficial
    
    (4)
    
    of Class if All WarrantsTitle of Class
    
    Owner
    
    Owner
    
    Percent of Class
    
    are ExercisedCommon
    
    Metaline Contact
    
    11,236,643
    
    
    79.89
    %
    
    
    11,236,643
    
    
    
    (73.30
    %)Mines LLC
    
    Direct OwnerP.O. Box 387Murray, ID 83874 (1)Common
    
    Nor-Pac Limited
    
    1,500,000
    
    
    10.66
    %
    
    
    1,500,000
    
    
    
    (9.70
    %)Company
    
    Direct OwnerP.O. Box 412Murray, ID 83874Common
    
    Richard L. Howell
    
    3,183,992
    
    
    22.60
    %
    
    
    3,433,992
    
    
    
    (22.40
    %)1509 Hemlock
    
    Indirect OwnerLewiston, ID 83501Common
    
    Ed Pommerening
    
    3,183,992
    
    
    22.60
    %
    
    
    3,433,992
    
    
    
    (22.40
    %)P.O. Box 369
    
    Indirect OwnerPinehurst, ID 83850Common
    
    John W. Beasley
    
    1,591,996
    
    
    11.30
    %
    
    
    1,841,996
    
    
    
    (12.00
    %)P.O. Box 387
    
    Indirect OwnerMurray, ID 83874Common
    
    Directors and
    
    7,959,980
    
    
    56.50
    %
    
    
    8,709,980
    
    
    
    (56.80
    %)Executive Officers
    
    Indirect Ownersas a group
  Note 1:
    Metaline Contact Mines LLC is owned, as to 99.994%, by Nor-Pac.  Note 2:
    Richard L. Howell is the Trustee of the R.L. and M.D.
Howell Trust, the owner of a 25% equity membership interest in
Nor-Pac; Ed Pommerening is the Manager of Riverview Timber Services
LLC, the owner of a 25% equity membership interest in Nor-Pac; and
John W. Beasley is the Manager of J.W. Beasley Interests LLC, a
member (as to 50%) of G.G.J.B. & K.G.P.B. Holdings Limited Company
(hereinafter GGJB). GGJB is the owner of a 25% equity membership
interest in Nor-Pac. -13-




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##### Table of Contents



By virtue of entities interests in Nor-Pac, Messrs. Howell,
Pommerening, and Beasley are considered as being indirect owners
of the above shares.There are no arrangements, written or oral, which may result in a
change in control of the Company. 
 Item 12. Certain Relationships and Related Transactions  On June 1, 1998, the Company entered into an Agreement for Management and
Consulting Services (hereinafter the Management Agreement) with
Nor-Pac. Under the terms of the Management Agreement, Nor-Pac provides
the Company with certain management and consulting services, and Nor-Pac
received Five Hundred Thousand (500,000) shares of the Companys
authorized, but unissued, common stock in the second half of 1998, Two
Hundred Fifty Thousand (250,000) shares quarterly in 1999, and Ten
Thousand Dollars ($10,000) per month thereafter commencing on January 1,
2000. The Management Agreement was amended on January 1, 2002 reducing
the cash consideration to Three Thousand Dollars ($3,000) per month, and
again amended on January 1, 2003 reducing the cash consideration to Five
Hundred Dollars ($500) per month. All payments due Nor-Pac pursuant to
the terms of the Management Agreement have been made.Because of their respective interests in Nor-Pac, Richard L. Howell, John
W. Beasley and Ed Pommerening may be deemed to have an indirect material
interest in the transaction.Subsequent Event to Management AgreementEffective January 1, 2004, the Company and Nor-Pac terminated the
Management Agreement by mutual consent.The Company has not transacted any business with promoters, nor have any
of its assets been or are to be acquired from promoters. 
 Item 13. Exhibits and Reports on Form 8-K  (a)
    
    Exhibits required by Item 601 of Regulation S-B: Exhibit No.
    
    Description31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  Omitted Exhibits are incorporated by reference to the Companys
Registration Statement on Form 10-SB; SEC File No. 0-31025.  (b)
    
    No reports have been filed on Form 8-K during the last fiscal
year covered by this report. -14-




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##### Table of Contents



Item 14. Controls and Procedures Annual Evaluation of the Companys Disclosure Controls and Internal Controls Within 90 days prior to the date of this Annual Report on Form 10-KSB, the
Company evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (Disclosure Controls), and its internal
controls and procedures for financial reporting (Internal Controls). This
evaluation (the Controls Evaluation) was done under the supervision and with
the participation of management, including the Companys Chief Executive
Officer (CEO) and Chief Financial Officer (CFO). Rules adopted by the SEC
require that in this section of the Annual Report the Company present the
conclusions of the CEO and the CFO about the effectiveness of its Disclosure
Controls and Internal Controls based on and as of the date of the Controls
Evaluation. CEO and CFO Certifications Appearing immediately following the Signatures section of this Annual Report
there are two separate forms of Certifications of the CEO and the CFO. The
second form of Certification is required in accord with Section 302 of the
Sarbanes-Oxley Act of 2002 (the Section 302 Certification). This section of
the Annual Report, which you are currently reading, is the information
concerning the Controls Evaluation referred to in the Section 302
Certifications and this information should be read in conjunction with the
Section 302 Certifications for a more complete understanding of the topics
presented. Disclosure Controls and Internal Controls Disclosure Controls are procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports filed under
the Securities Exchange Act of 1934 (Exchange Act), such as this Annual
Report, is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission (SEC) rules and forms.
Disclosure Controls are also designed with the objective of ensuring that such
information is accumulated and communicated to our management, including the
CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure. Internal Controls are procedures which are designed with the
objective of providing reasonable assurance that the Companys (1) transactions
are properly authorized; (2) assets are safeguarded against unauthorized or
improper use; and (3) transactions are properly recorded and reported, all to
permit the preparation of our financial statements in conformity with generally
accepted accounting principles. Limitations of the Effectiveness of Controls The Companys management, including the CEO and CFO, does not expect that its
Disclosure Controls or its Internal Controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within the Company have
been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the control. The design of any system of controls also
is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions; over time, control may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected. -15-




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##### Table of Contents



Scope of the Controls Evaluation The CEO/CFO evaluation of the Companys Disclosure Controls and our Internal
Controls include a review of the controls objectives and design, the controls
implementation by the Company and the effect of the controls on the
information generated for use in this Annual Report. In the course of the
Controls Evaluation, management sough to identify data errors, controls
problems or acts of fraud and to confirm that appropriate corrective action,
including process improvements, were being undertaken. This type of evaluation
will be done on a quarterly basis so that the conclusions concerning controls
effectiveness can be reported in the Companys Quarterly Reports on Form 10-QSB
and Annual Report on Form 10-KSB. The Companys Internal Controls are also
evaluated on an on-going basis by its independent auditors in connection with
their audit and review activities. The overall goals of these various
evaluation activities are to monitor our Disclosure Controls and our Internal
Controls and make modifications as necessary; our intent in this regard is that
the Disclosure Controls and the Internal Controls will be maintained as dynamic
systems that change (including the improvements and corrections) as conditions
warrant. Among other matters, the Company sought in its evaluation to determine whether
there were any significant deficiencies or material weaknesses in the
Companys Internal Controls, or whether the Company had identified any acts of
fraud involving personnel who have a significant role in the Companys Internal
Controls. This information was important both for the Controls Evaluation
generally and because items 5 and 6 in the Section 302 Certifications of the
CEO and CFO require that the CEO and CFO disclose that information to our
Boards Audit Committee and to our independent auditors and to report on
related matters in this section of the Annual Report. In the professional
auditing literature, significant deficiencies are referred to as reportable
conditions; these are control issues that could have a significant adverse
effect on the ability to record, process, summarize and report financial data
in the financial statements. A material weakness is defined in the auditing
literature as a particularly serious condition where the internal control does
not reduce to a relatively low level the risk that misstatements caused by
error or fraud may occur in amounts that would be material in relation to the
financial statements and may not be detected within a timely period by
employees in the normal course of performing their assigned functions. The
Company also sought to deal with other controls matters in the Controls
Evaluation, and in each case if a problem was identified, management considered
what revision, improvement and/or correction to make in accord with our
on-going procedures. In accord with SEC requirements, the CEO and CFO note that, since the date of
the Controls Evaluation to the date of this Quarterly Report, there have been
no significant changes in Internal Controls or in other factors that could
significantly affect Internal Controls, including any corrective actions with
regard to significant deficiencies and material weaknesses. Conclusions Based upon the Controls Evaluation, the Companys CEO and CFO have concluded
that, subject to the limitations noted above, its Disclosure Controls are
effective to ensure that material information relating to the Company is made
known to management, including the CEO and CFO, particularly during the period
when its periodic reports are being prepared, and that its Internal Controls
are effective to provide reasonable assurance that the Companys financial
statements are fairly presented in conformity with generally accepted
accounting principles. -16-




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##### Table of Contents



SIGNATURE In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. METALINE CONTACT MINES By:
    
    /s/ Richard L. Howell
    
    Date: 3/26/04Richard L. Howell, President(Principal Executive Officer)By:
    
    /s/ John W. Beasley
    
    Date: 3/26/04John W. Beasley, Secretary/Treasurer(Principal Financial Officer)
 In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated. By:
    
    /s/ Richard L. Howell
    
    Date: 3/26/04Richard L. HowellDirectorBy:
    
    /s/ John W. Beasley
    
    Date: 3/26/04John W. BeasleyDirectorBy:
    
    /s/ Ed Pommerening
    
    Date: 3/26/04Ed PommereningDirector
 Supplemental information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Exchange Act by Non-Reporting Issuers Not Applicable -17-